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Income Tax Appellate Tribunal, AGRA (SMC
Before: SHRI A. D. JAIN
IN THE INCOME TAX APPELLATE TRIBUNAL AGRA (SMC) BENCH: AGRA
BEFORE SHRI A. D. JAIN, JUDICIAL MEMBER
I.T.A No. 165/Agra/2016 (ASSESSMENT YEAR-2011-12)
Harsh Saluja ITO, -3 (2), Mathura. 86C, Krishna Nagar, Mathura. PAN No.AYRPS3957K (Assessee) (Revenue)
Assessee by Shri Navin Gargh, AR Revenue by Shri Waseem Arshad, Sr.DR.
Date of Hearing 21.09.2017 Date of Pronouncement 01.12.2017
ORDER This is assessee’s appeal for assessment year 2011-12, raising the following grounds: “1.1 BECAUSE in any view, the ld. CIT(A) has grossly erred in confirming the addition made by the A.O. of Rs. 3,30,471/- and further enhancing the addition by Rs.9,66,820/- (Total addition of Rs. 12,97,291) for so called aggregate cash deposit in different dates during F.Y. 2010-11 in Union Bank of India SB A/c No. 2969 u/s 68 of the I.T. Act is grossly arbitrary, highly unjust, perverse, wrong, illegal & against the peculiar facts of the case and bad in law.
1.2 BECAUSE in any view, the Id. CIT(A) has grossly erred in confirming the addition made by the A.O. of Rs.
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3,30,471/- and further enhancing the addition by Rs.9,66,820/- (Total addition of Rs. 12,97,291) while the aggregate cash deposit in union Bank of India SB A/c No. 2969 is less than Rs.12,97,291/-, and also has completely ignored the peak balance of Rs.1,71,764/- as on 17.03.2011, thus in any view the addition made is grossly arbitrary, highly unjust, perverse, wrong, illegal & against the peculiar facts of the case and bad in law.
1.3 BECAUSE in any view, the other income of Rs.20,000/- shown in the Return of Income from these transaction in union Bank of India SB A/c No.2969 have been completely ignored which is wrong & illegal.
1.4 BECAUSE in any view, without issuing the Notice as per law u/s 251(2) of the I.T. Act, and without allowing the reasonable opportunity of being heard, the addition made of Rs. 9,66,820/- by enhancement of income by the ld. CIT (A) is wrong, illegal and bad in law.
1.5 BECAUSE in any view, the ld. CIT (A) has grossly erred in making the above addition u/s 68 of the I.T. Act of aggregate cash deposit of Rs. 12,97,291/- (3,30,471 + 9,66,820) in Union Bank of India SB A/c No. 2969 as it is a settled law that Bank Pass Book is not Books of Accounts hence the addition confirmed by the ld. CIT (A), is wrong, illegal and against the peculiar facts and law of the case.
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2.1 BECAUSE in any view, the household drawing estimated of Rs. 60,000/- after making an addition of Rs. 24,000/- by A.O. and confirmed by the Id. CIT (A) is wrong & illegal as the appellant is bachelor.
2.2 BECAUSE in any view, and without admitting the addition of Rs. 24,000/- for house hold expenses the same should have been inter alia telescoped otherwise.
3 BECAUSE in any view, the interest charged u/s 234A as per Notice of Demand dt. 28.02.2014 is wrong and illegal.
4 BECAUSE in any view, and without prejudice the aforesaid grounds, the Assessment and income assessed, addition made, interest charged in/and the Assessment Order passed u/s 143(3) are wrong, illegal, without proper opportunity, bad in law and against the facts and law of the case.”
While passing the assessment order, the AO observed, inter alia, as under:
“2. The assessee is a Proprietor of M/s. Option Aqua Control Technologies through, which trading of sanitary goods was done and total turnover was Rs.27,59,131/- on which GP shown by the assessee is 23.36% and net profit is 11.25% after deduction of depreciation for Rs.25,967/- on computer and motor cycle, net profit comes to Rs.2,92,049/- which is 10.58% of the total turnover and other income shown from commission
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etc is Rs.l,72,509/- and thus total taxable income after deduction under chapter VI A comes to Rs.3,57,770/-.
As per AIR information the assessee also maintain saving account in the UBI vide Bank A/c no. 556802010002969 in which total cash deposit of Rs.12,97,291/- was made and this bank account was not disclosed by the assessee in his books of account and nature of this shows that cash deposit made from different stations like Nagpur, Raipur, Nellore etc throughout the Financial Year 2010-11 and regularly withdrawal was made also which proves that the assessee was involved in any business which was not shown by the assessee in his books of account. When the assessee was asked about his account, he told that he operated business of Gillets through his account. He was asked to show cause why not NP @ 23.36% be applied on total cash deposit of Rs.12,97,291/- deposited in UBI as to calculate net profit on this receipt, as administrative expenses were already claimed by you. The assessee submitted reply on 21.02.2014, stating therein, that Rs.20,000/- was already shown as other income, which is related to Gillet ornaments business under section 44AD of Income Tax Act, 1961. Contention of the assessee is not acceptable as the assessee was under legal obligation to show sale from all trades, but he failed to do so. The plea that other income is related to turnover of Rs.12,97,291/- is false and baseless and applying NP @ 23.36% on Rs.12,97,291/- treating as turnover net profit comes to Rs.3,30,471/- which is added to the income of the assessee
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and to impose penalty of concealment, proceedings u/s 274 r.w.s. 271(1 )(C) is initiated.”
In the impugned order, however, the ld. CIT(A) has found as follows:
“3. 5.3 I have gone through the assessment order, submissions of the assessee and legal position in this regard.
It is seen that although assesses has claimed that the cash deposits in the bank account are on account of business of gillets, but when AO verified, he could not file any documents, bills or vouchers in support of any business being carried out by him. It was not understandable as to how the AO held that assessee is engaged in the business of trading of gillet and applied net profit rate of 23.36% treating the cash deposits in the bank as turnover of the business.
5.3.1 Since assessee neither had any proof for running of any business of trading in gillet, nor any sales tax registration for this purpose, nor any bills for sale or purchase of such articles, vide order sheet entry dated 11.1.16, assessee was asked to file documentary proof to show that he is engaged in the business mess of trading of gillet ornaments, whereas main business of the assessee was that of sanitary goods.
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He was also given a show cause as to why the cash deposits in the bank be not treated as unexplained cash in the hands of the assesses under section 68 and to that extent the order sheet entry was to be treated as notice for enhancement of income.
5.3.2 Inspite of further opportunities provided to the assessee to file these documentary evidence for carrying business/ trading in Gillet ornaments on 19.1.16, 29.1.16, 3.2.16 and 4.2.16, assessee could not furnish any details.
5.3.3 It is an accepted legal principle that nature and source of cash credits is to be explained by assessee. If assessee fails to explain the nature and source by way of showing the source i.e., who has given the cash amount, why the same has been given and what are the supporting documents to show that they are genuine business transactions, the same would not be treated as explained income in the hands of the assessee as has been laid down in CIT Vs. Precision Finance Pvt. Ltd. 208 ITR 465 (Cal.), Kale khan Mohammad Hanif Vs. CIT 50 ITR 1 etc.”
The ld. Counsel for the assessee has contended that the ld. CIT(A) has erred in making the addition of Rs.12,97,291/- u/s 68 of the IT Act, representing the deposits as unexplained. The argument is that the bank passbook is not a book of
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account of the assessee and, therefore, no addition u/s 68 of the Act can be made. Reliance has been placed on ‘Bhaichand N. Gandhi’, 11 Taxman 59 (Bom), ‘CIT vs. Taj Borewells’, 291 ITR 232 (Mad), both followed by this Bench in order dated 25.09.2007 in ITA Nos. 249 and 250/Agra/2007, for A.Y. 2003-04 (copy filed), in Narendra Kishore Goswami’.
On the other hand, the ld. DR has placed strong reliance on the impugned order. It has been contended that as correctly observed by the ld. CIT(A), the assessee has not been able to show as to why the cash deposits in the bank ought not to be treated as unexplained cash in the hands of the assessee under the provisions of the u/s 68 of the Act. The ld. DR has further argued that alternatively, if the addition is not to be sustained u/s 68 of the Act, the same be upheld by invoking the provisions of section 69, which, according the ld. DR, is within the power of the Tribunal.
I have heard the parties and have perused the material on record. In ‘Bhaichand N. Gandhi’ (supra), ‘Taj Borewells’ (supra) and ‘Narendra Kishore Goswami’(supra), it has categorically been held that in case of bank deposits, bank passbook not being a book of account, no addition can be made by following the provisions of section 68 of the Act. No decision contrary to the above decisions has been cited.
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Apropos the Department’s contention that in case the addition u/s 68 of the 7.
Act was not to be sustained, the same be sustained by invoking the provisions of
section 69 of the Act. I do not find substance in this contention. Nothing has been
brought before me to show that this course of action can be adopted by the Tribunal. Rather, in ‘Smt. Sareka Jain vs. CIT’, 84 Taxmann. Com 64(Allahabad), it has been held that where the subject matter of the dispute in the appeal before the
Tribunal is the addition made under section 68 of the I.T. Act, the Tribunal cannot
travel beyond the scope of the appeal to convert the addition to one under section
69A of the Act.
In view of the above, the addition made by the ld. CIT(A) is deleted.
In the result, the appeal is allowed.
Order pronounced in the open court on 01/12/2017.
Sd/- (A.D. JAIN) JUDICIAL MEMBER Dated 01/12/2017 *AKV* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR